It should also be noted that my research from websites seems to indicate that the isolation is dynamic in that it checks to see if a file is already in the shared location and if it is then it isolates and if it isnt then it installs to that shared locations. Thus you can end up in a situation when you dont actually know if a file has been isolated during installation and so having to build checker scripts to locate the file before patching it!

If you want to do proper conflict analysis then use GUID syncing and merge modules and not isolation. If unable to do either GUID syncs or MM's then isolate but only as a last resort in my book.